When Dr. Alexis Roettinger returned last year to Newport, R.I., she knew it was worth it to buy a house.
After completing her medical residency in Buffalo, N.Y., she had landed a new job at the local hospital in the seaside city where she grew up. Roettinger, 35, knew she'd be staying a while.
To save money for a down payment, she lived in a rental condo. Then the buying bug bit. After looking at eight properties this spring, she found a house with the size, location and price she wanted.
"I don't think this will be my forever-and-forever house, but it will be for the next five to 10 years," she says.
What Is Your Five-Year Plan?
Roettinger's story highlights the most important question for homebuyers: How long are you planning to live in the house? At the minimum, real estate professionals and financial advisers agree that buyers should plan to own a home at least five, if not seven years, to make it worth it. Less time than that, and the transaction fees and payments typically don't make money sense.
During the housing boom, extraordinary home-value appreciation distorted the conventional wisdom of the five-year rule and many people rushed to buy, regardless of their time horizon. The recession and housing crisis sent the pendulum in the other direction. Many are now starting to ask the question: Is buying a house worth it
? Is it still the solid economic and social investment it once was?
"There has been an over-correction in terms of psychology, and homebuyers are overly suspicious," says Stan Humphries, chief economist at Zillow.com
, about the current homebuying market. "But they need to get into a place of pragmatic decision-making. Break out a pencil and run the numbers, use calculators, look at the price of the house, value and estimate for rent. That can help people think through the decision more."